The Razor's Edge

2-Year Price History

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

MAS Revenue

As a value investing shop, we are interested in seeing how MAS's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 1.16x and the low end of the range at 0.69x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for MAS of 0.35x is well below its normal historic Price to Sales levels. At a price of $9.58, MAS is 62% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.

MAS Cash Earnings

As the old saying goes, "Cash is King!" However, we prefer to capture a few other items within our analysis to identify "cash earnings". Nevertheless, an analysis of Cash Earnings is absolutely pivotal to assessing a company's value, and currently MAS is significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for MAS, the current level of Cash Earnings compared to its historical levels helps identify where MAS is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 17.35 and a historical low Cash Earnings per share ratio of 9.90, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for MAS? From the Ockham perspective, we are looking specifically at MAS to see if the market is recognizing the huge disparity between MAS's past stock price to Cash Earnings ratio to today's levels. At a difference of 51% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at MAS. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

MAS Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure on a company's inherent expectations.

Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from MAS against the historic high and low levels over an available data range. Because MAS has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In MAS’s case, the estimated annual dividend is $0.94 producing a current dividend yield of 9.81%. The highest dividend yield from MAS in recent history was 13.78% while the lowest dividend yield was 1.78%. If you are looking for some “bang for your buck” then a dividend yield of 26.09% above the historically median should be enticing. MAS receives a positive boost in our view because as you know, equity at its core is simply a claim on future dividends.